Equity benchmarks closed lower on profit booking Tuesday after a rally in previous two consecutive trading sessions but the broader markets outperformed despite weak breadth. Fears of delay in rate cut after July inflation data and correction in global peers dented sentiment that dragged the Sensex more than 200 points intraday, though it halves losses in last hour of trade.
Indices started off trade today after a long weekend as the market was shut on Monday for Independence Day holiday.
The 30-share BSE Sensex was down 87.79 points at 28064.61 and the 50-share NSE Nifty fell 29.60 points to 8642.55 while the BSE Midcap gained half a percent.
Experts see some consolidation in near term as the market digested June quarter earnings and inflation data. They don't expect any rate cut in 2016.
While consumer price inflation (CPI) breaching the 6-percent mark is slightly worrisome, Tirthankar Patnaik of Mizuho Bank believes the Reserve Bank of India's FY17 target of 5 percent still looks achievable.
He says the monsoon's progress and consequent improvement in Kharif sowing this year raises confidence of food inflation easing off in the coming months. He feels it could provide RBI the space to cut rates by 25 basis points by the end of the fiscal.
Wholesale price index (WPI) inflation in July jumped to 23-month high at 3.55 percent against 1.62 percent in preceding month and estimates of 2.65 percent by a CNBC-TV18 poll. Retail inflation measured on consumer price index (CPI) for July also hit 23-month high of 6.07 percent against 5.77 percent on MoM basis.
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